AsiaInfo-Linkage Reports Unaudited Third Quarter 2012 Results

        AsiaInfo-Linkage Reports Unaudited Third Quarter 2012 Results

-- Meeting guidance with net revenue (non-GAAP)(1) of US$129.4 million

-- Meeting guidance with net income attributable to AsiaInfo-Linkage,
Inc.(non-GAAP)(2) per basic share of US$0.24

PR Newswire

BEIJING and SANTA CLARA, Calif., Oct. 31, 2012

BEIJING and SANTA CLARA, Calif., Oct. 31, 2012 /PRNewswire-FirstCall/ --
AsiaInfo-Linkage, Inc. (NASDAQ: ASIA) ("AsiaInfo-Linkage," the "Company,"
"we," "us" or "our"), a leading provider of telecommunication software
solutions and services in China, today announced financial results for the
quarter ended September 30, 2012.

"In the third quarter we continued to see healthy demand for our IT solutions
from China's three telecommunications carriers," said AsiaInfo-Linkage
President and Chief Executive Officer Steve Zhang. "Our growth remained steady
and in line with our overall expectations over the first nine months of this
year."

"In terms of customer-specific developments, we signed all of our remaining NG
BOSS 3.5 contracts with China Mobile, and our sales and project teams began
work in evaluating the carrier's newly released specifications for NG BOSS
4.0. For China Unicom's six northern provinces convergent software projects,
we signed the second phase of the software and license contracts and also
signed two provincial contracts for software implementation and maintenance,
and expect to sign four more in the near future. Going forward, we anticipate
these provinces will follow the usual maintenance and upgrade cycle, including
periodic mandatory upgrades as set by the carrier's central headquarters. Our
China Telecom business continued to yield steady results and has featured more
headquarter-level projects, as opposed to the operational-level and
provincial-level focus of our previous work. As a result, we have seen greater
opportunities to deploy cloud-based solutions, including one which allows
China Mobile to better monitor its data traffic and another that enables the
carrier's individual users to access their account histories in a variety of
ways. While individual account data retrieval is not a new concept, our
low-cost cloud solutions allow for this type of service to be offered to
larger numbers of subscribers."

"What all of our projects with China's three carriers have in common is a
focus on real-time monitoring of massive amounts of data traffic in order to
optimize network performance, identify preferred usage plans, and ultimately
enhance the user experience," added Mr. Zhang.

Third Quarter 2012 Financial Results

Total revenues for the third quarter of 2012 were US$132.2 million, an
increase of 10.8% year-over-year and an increase of 4.7% sequentially. Net
revenue (non-GAAP) for the third quarter of 2012 was US$129.4 million, an
increase of 10.4% year-over-year and an increase of 4.0% sequentially. The
year-over-year increases were primarily the result of continued investment in
software and services by our telecommunications carrier customers and their
provincial-level entities.

Gross margin for the third quarter was 37.3%, compared to 43.9% in the
year-ago period and 38.5% in the previous quarter. Gross margin of net revenue
(non-GAAP)(3) was 42.6% in the third quarter of 2012, compared to 49.4% in the
year-ago period and 43.8% in the previous quarter. The year-over-year decrease
in gross margin was primarily attributable to an increase in employee
compensation, which was mainly due to the hiring of approximately 970
additional implementation engineers and wage inflation. The year-over-year
decrease in gross margin (non-GAAP) was mainly attributable to an increase in
the number of implementation engineers and wage inflation. The slight
sequential decrease in both gross margin and gross margin (non-GAAP) was
primarily due to an increase of approximately 300 implementation engineers for
current and anticipated contracts.

Total operating expenses in the third quarter of 2012 increased 27.2%
year-over-year and 1.0% sequentially to US$47.1 million. The year-over-year
increase was primarily attributable to an increase in general and
administrative ("G&A") expenses, as well as increases in sales and marketing
expenses and research and development ("R&D") expenses to develop products for
anticipated contract opportunities, to support overall product
standardization, and to enhance delivery. The sequential increase in operating
expenses was primarily attributable to an increase in sales and marketing
expenses, which was partially offset by a decrease in G&A expenses.

Sales and marketing expenses in the third quarter of 2012 increased 23.3%
year-over-year and 8.8% sequentially to US$20.1 million. The year-over-year
increase in sales and marketing expenses was the result of international
market expansion and general wage inflation. The sequential increase was
mainly due to a greater number of customer workshops and meetings related
expenses. G&A expenses for the third quarter of 2012 were US$6.3 million,
representing a year-over-year increase of 181.5% and a sequential decrease of
20.1%. The year-over-year increase was mainly attributable to the increase in
wage inflation along with a rise in headcount, as well as a US$1.2 million
reversal of doubtful accounts in the third quarter of 2011. The sequential
decrease in G&A expenses was mainly the result of enhanced cost controls. R&D
expenses for the third quarter of 2012 increased 12.1% year over year and
increased 2.1% sequentially to US$20.8 million. The year-over-year increase in
R&D expenses reflected an increase in total compensation as a result of wage
inflation and the hiring of approximately 160 R&D engineers. The sequential
increase in R&D expenses was primarily due to the hiring of approximately 100
additional R&D engineers.

Income from operations for the third quarter of 2012 was US$2.2 million,
representing a year-over-year decrease of 85.6% and a sequential increase of
11.3%. Operating margin of total revenue was 1.7% for the third quarter of
2012, compared to 12.8% in the year-ago period and 1.6% in the previous
quarter. Operating margin of net revenue (non-GAAP)(4) for the third quarter
of 2012 was 11.6%, compared to 23.6% in the year-ago period and 12.0% in the
previous quarter. The year-over-year decrease in operating margin of net
revenue (non-GAAP) was mainly attributable to the increases in employee
headcount and wage inflation, which led to the increase in cost of sales and
R&D expenses. The sequential decrease was primarily due to an increase in the
number of implementation and R&D engineers.

Other income for the third quarter of 2012 was US$2.1 million, compared to
US$0.6 million in the year-ago period and US$4.0 million in the previous
quarter. The year-over-year increase was primarily due to improved returns
from bank deposits and a US$1.1 million impairment loss on short-term and
long-term investments in the third quarter of 2011. The sequential decrease in
other income reflects a US$1.2 million gain from sale investment products in
the second quarter.

In the third quarter of 2012, the Company recorded net income attributable to
AsiaInfo-Linkage, Inc. of US$4.6 million, or US$0.06 per basic share, compared
to US$13.3 million, or US$0.18 per basic share, in the year-ago period and
US$6.2 million, or US$0.09 per basic share, in the previous quarter.

In the third quarter of 2012, net income attributable to AsiaInfo-Linkage,
Inc. (non-GAAP) was US$17.3 million or US$0.24 per basic share. Net income
attributable to AsiaInfo-Linkage, Inc. (non-GAAP) in the year-ago period was
US$26.7 million, or US$0.37 per basic share. Net income attributable to
AsiaInfo-Linkage, Inc. (non-GAAP) in the previous quarter was US$18.6 million
or US$0.26 per basic share. Net income attributable to AsiaInfo-Linkage, Inc.
(non-GAAP) decreased 35.1% year-over-year and 6.9% sequentially, reflecting
the factors discussed above.

As of September 30, 2012, AsiaInfo-Linkage had cash and cash equivalents and
restricted cash totaling US$255.9 million and short-term investments totaling
US$39.1 million. Operating cash flow in the third quarter of 2012 was a net
inflow of US$9.4 million.

As of September 30, 2012, AsiaInfo-Linkage had gross accounts receivable
("AR") of US$282.4 million compared to US$307.3 million as of June 30, 2012
and US$292.2 million as of September 30, 2011. Gross AR includes agent
arrangements with International Business Machines Corporation ("IBM") or its
distributors, as well as a few other hardware companies ("IBM-Type
Arrangements"). Since these arrangements typically consist of back-to-back
payment terms for certain products sold to AsiaInfo-Linkage customers, there
is no impact on the Company's cash flow or days of sales outstanding ("DSO").
Net AR, which excludes IBM-Type Arrangements, was US$222.1 million as of
September 30, 2012, compared to US$222.9 million as of June 30, 2012 and
US$224.3 million as of September 30, 2011. The combined effect of revenue and
the AR trends, including our constant focus on the collections process,
resulted in the Company's DSO being 151 days as of September 30, 2012,
compared to 154 days as of June 30, 2012 and 159 days as of September 30,
2011. A table presenting additional information regarding the Company's gross
AR, AR relating to IBM-Type Arrangements ("IBM-Related AR"), net AR, revenues,
and DSO is provided at the end of this press release.

Nine Months 2012 Financial Results

Total revenue for the nine months ended September 30, 2012 was US$382.2
million, an increase of 9.2% year-over-year. Net revenue (non-GAAP) for the
nine months ended September 30, 2012 was US$375.0 million, an increase of
11.6% year-over-year.

In the nine months ended September 30, 2012, gross margin was 38.3%, compared
to 43.9% in the year-ago period. Gross margin of net revenue (non-GAAP) was
43.7% in the nine months ended September 30, 2012, compared to 50.7% in the
year-ago period.

Income from operations for the nine months ended September 30, 2012 was US$6.7
million, a decrease of 85.1% year-over-year.

In the nine months ended September 30, 2012, AsiaInfo-Linkage recorded net
income attributable to AsiaInfo-Linkage, Inc. of US$17.2 million, or US$0.24
per basic share, compared to US$64.1 million, or US$0.87 per basic share, in
the year-ago period, a decrease of 73.1% and 72.4% year-over-year
respectively.

Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) was US$55.3
million or US$0.76 per basic share in the nine months ended September 30,
2012, a decrease of 37.6% and 37.2% year-over-year, respectively.

Recent Developments

The work of AsiaInfo-Linkage's Special Committee in evaluating a non-binding
proposal letter from Power Joy (Cayman) Limited ("Power Joy"), a wholly owned
subsidiary of CITIC Capital China Partners II, L.P., pursuant to which Power
Joy proposed to acquire all of the outstanding shares of common stock of
AsiaInfo-Linkage, remains ongoing and may include soliciting interest from,
and engaging in discussionswith, other potential qualified interested parties
regarding a potential transaction involving AsiaInfo-Linkage. However, as
previously disclosed, there can be no assurance that any definitive offer will
ultimately be made, that any agreement will be executed, or that any
transaction will be approved or consummated by the Company.

Business Outlook

AsiaInfo-Linkage expects fourth quarter 2012 net revenue (non-GAAP) to be in
the range of US$152 million to US$156 million. The Company expects fourth
quarter 2012 net income attributable to AsiaInfo-Linkage per basic share
(non-GAAP) to be in the range of US$0.40 to US$0.43.

(1) Net revenue (non-GAAP) represents total revenue net of third-party
hardware costs that are passed through to customers. A reconciliation of all
non-GAAP measures used in this press release to the most directly comparable
GAAP measures is provided at the end of this press release.
(2) Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) and net
income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share
measures exclude share-based compensation expenses, amortization of acquired
intangible assets, impairment loss on investments, non-recurring consulting
related expenses, dividend income and a 15% tax rate adjustment for the
Company's Nanjing subsidiary ("LKNJ").
(3) Gross margin of net revenue (non-GAAP) is calculated by dividing gross
profit, excluding third-party hardware costs, amortization of acquired
intangible assets and share-based compensation expenses, by net revenue
(non-GAAP).
(4) Operating margin of net revenue (non-GAAP) is calculated by dividing
income from operations, excluding amortization of acquired intangible assets,
share-based compensation expenses and non-recurring consulting related
expenses, by net revenue (non-GAAP).



ASIAINFO-LINKAGE, INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands of US$, except share and per share amounts)


                                   Three Months          Nine Months

                                   Ended September 30,   Ended September 30,
                                   2012       2011       2012       2011
Revenues:
Software products and solutions    $120,870   $108,428   $351,704   $312,661
Service                            8,412      8,689      22,919     22,706
Third-party hardware               2,939      2,168      7,566      14,585
Total revenues                     132,221    119,285    382,189    349,952
Cost of revenues:
Software products and solutions    75,199     59,912     215,539    169,709
Service                            4,898      4,973      13,060     12,716
Third-party hardware               2,792      2,060      7,187      13,856
Total cost of revenues             82,889     66,945     235,786    196,281
Gross profit                       49,332     52,340     146,403    153,671
Operating expenses (income):
Sales and marketing                20,055     16,269     58,843     54,725
General and administrative         6,258      2,223      21,564     15,863
Research and development           20,821     18,574     59,312     40,398
 Government subsidies           0          0          0          (2,125)
Total operating expenses           47,134     37,066     139,719    108,861
Income from operations             2,198      15,274     6,684      44,810
Other income (expenses), net
Interest income                    1,914      1,376      6,345      3,989
Dividend income                    78         0          682        180
Gain from sales of short-term      61         0          3,333      199
investments
Impairment loss on short-term      0          (144)      0          (144)
investments
Impairment loss on long-term       0          (950)      0          (950)
investments
Others, net                        39         296        10         21
Total other income, net            2,092      578        10,370     3,295
Income before income tax expense
(benefit) and loss on equity       4,290      15,852     17,054     48,105
method investment, net of income
tax
Income tax expense (benefit)       289        3,163      2,310      (14,344)
Income after income tax expense
(benefit) before loss on equity    4,001      12,689     14,744     62,449
method investment, net of income
tax
Loss on equity methodinvestment,  (93)       0          (93)       0
net of income tax
Net income                         3,908      12,689     14,651     62,449
Less: Net loss attributable to     (711)      (600)      (2,555)    (1,629)
noncontrolling interest
Net income attributable to         $4,619     $13,289    $17,206    $64,078
AsiaInfo-Linkage, Inc.
Earnings per share:
Net income attributable to AsiaInfo-Linkage, Inc.

common stockholders
Basic                              $0.06      $0.18      $0.24      $0.87
Diluted                            $0.06      $0.18      $0.24      $0.87
Weighted average shares used in
computation:
Basic                              72,613,106 71,934,704 72,532,007 73,404,067
Diluted                            72,804,388 72,593,341 72,764,908 74,034,312





ASIAINFO-LINKAGE, INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (UNAUDITED)

(Amounts in thousands of US$)


                                       Three Months Ended    Nine Months Ended

                                       September 30,         September 30,
                                         2012       2011     2012      2011
Net income                             $ 3,908    $ 12,689 $ 14,651  $ 62,449
Other comprehensive (loss) income, net
of tax:
Change in cumulative foreign currency    (1,184)    6,162    (2,561)   14,113
translation adjustment
Transfer to statements of operations
of realized gain on
 available-for-sale
securities, net of tax effects of $22    (39)       0        (2,696)   (169)
 and $0, $637 and $30 for the
three months and nine months
 ended September 30, 2012 and
2011, respectively
Net unrealized (loss) gain on
available-for-sale securities, net
 of tax effects of $25 and
$47, $(208) and $128 for the three       (137)      (253)    631       (650)
 months and nine months ended
September 30, 2012 and 2011,
respectively
Transfer to statements of operations
of other-than-temporary                  0          144      0         144
 impairment on
available-for-sale investment
Other comprehensive (loss) income        (1,360)    6,053    (4,626)   13,438
Comprehensive income                     2,548      18,742   10,025    75,887
Less: Comprehensive loss attributable    (711)      (600)    (2,555)   (1,629)
to noncontrolling interest
Comprehensive income attributable to   $ 3,259    $ 19,342 $ 12,580  $ 77,516
AsiaInfo-Linkage, Inc.



ASIAINFO-LINKAGE, INC.
CONDENSED CONSOLIDATED BALANCE SHEETS (UNAUDITED)
(Amounts in thousands of US$)
                                            As of
ASSETS:                                     September. 30,  December. 31, 2011
                                            2012
Current Assets:
Cash and cash equivalents                   $216,572        $272,438
Restricted cash                             39,278          21,226
Short-term investments – available-for-sale 26,444          27,909
securities
Short-term investments – held-to-maturity   12,617          0
securities
Accounts receivable (net of allowances of
$3,792 and $2,905 as of September 30, 2012  282,424         281,564
and December 31, 2011, respectively)
Inventories, net                            22,885          15,309
Other receivables                           4,943           4,480
Deferred income tax assets – current        14,263          14,294
Prepaid expenses and other current assets   11,916          6,453
Total current assets                        631,342         643,673
Long term investments                       6,118           4,863
Property and equipment, net                 17,574          8,778
Other acquired intangible assets, net       131,901         163,028
Deferred income tax assets – non-current    1,750           1,751
Goodwill                                    433,475         433,525
Land use right, net                         14,231          14,543
Other non-current assets                    703             0
Total Assets                                $1,237,094      $1,270,161
LIABILITIES, REDEEMABLE NONCONTROLLING INTEREST AND EQUITY
Current Liabilities:
Accounts payable                            $76,940         $91,094
Accrued expenses                            24,791          22,905
Deferred revenue                            25,136          32,378
Accrued employee benefits                   64,521          78,972
Other payables                              5,356           5,582
Income taxes payable                        3,518           12,602
Other taxes payable                         7,748           11,864
Deferred income tax liabilities – current   8,616           9,091
Total current liabilities                   216,626         264,488
Unrecognized tax benefits                   2,203           3,344
Deferred income tax liabilities –           24,458          24,458
non-current
Other long term liabilities                 573             573
Total Liabilities                           $243,860        $292,863
Redeemable noncontrolling interest          (2,932)         385
Equity:
AsiaInfo-Linkage, Inc. Stockholders Equity:
Common stock                                789             786
Additional paid-in capital                  855,046         847,879
Treasury stock, at cost                     (87,746)        (87,746)
Statutory reserve                           21,748          21,748
Retained earnings                           163,733         146,527
Accumulated other comprehensive income      42,498          47,124
Total AsiaInfo-Linkage, Inc. stockholders'  $996,068        $976,318
equity
Noncontrolling interest                     98              595
Total Equity                                996,166         976,913
Total Liabilities, Redeemable               $1,237,094      $1,270,161
Noncontrolling Interest and Equity

Third Quarter 2012 Conference Call Details

AsiaInfo-Linkage management will hold an earnings conference call at 5:00 p.m.
Pacific Time / 8:00 p.m. Eastern Time on October 31, 2012 (8:00 a.m.
Beijing/Hong Kong Time on November 1, 2012). Management will discuss results
and highlights of the quarter and answer questions from investors.

The dial-in numbers for the conference call are as follows:

Local:
New York:               +1-718-354-1231
Hong Kong:              +852-2475-0994
China, Domestic Mobile:  400-620-8038
China, Domestic:         800-819-0121


International Toll Free: +1-866-519-4004

United States:
Hong Kong:               800-930-346
International Toll:      +65-6723-9381

                         39487378
The conference ID # is

A replay of the call will be available until 7:59 a.m. Eastern Time on
November 8, 2012 by dialing one of the following numbers:

U.S Toll Free:                                   +1-866-214-5335
International: +61-2-8235-5000
The replay ID # is                               39487378

Additionally, a live and archived webcast of this call will be available on
the Investor Relations section of the AsiaInfo-Linkage website at
www.asiainfo-linkage.com.

About AsiaInfo-Linkage, Inc.

AsiaInfo-Linkage, Inc. (NASDAQ: ASIA) is a leading provider of high-quality
software solutions and IT services in China's telecommunications industry.
Following the merger between AsiaInfo Holdings, Inc. ("AsiaInfo") and Linkage
Technologies International Holdings Limited ("Linkage") on July 1, 2010,
AsiaInfo-Linkage leverages both AsiaInfo's and Linkage's leading market
positions and complementary customer bases to provide a robust, comprehensive
service offering primarily to China's telecom operators. AsiaInfo-Linkage's
world-class R&D capabilities and extensive base of highly skilled engineers
provide best-of-class solutions to help customers differentiate themselves
from the competition.

For more information about AsiaInfo-Linkage, please visit
www.asiainfo-linkage.com.

Reconciliation of non-GAAP Measures

This earnings release presents the following "non-GAAP financial measures" as
defined by applicable U.S. securities regulations. The presentation of these
non-GAAP financial measures is not meant to be considered in isolation or as a
substitute for our financial results prepared in accordance with GAAP. The
non-GAAP financial measures are provided as additional information to help
both management and investors compare business trends among different
reporting periods on a consistent and more meaningful basis and enhance
investors' overall understanding of the Company's current financial
performance and prospects for the future. These non-GAAP measures have
limitations, however, because they do not include all items of income and
expenses that impact the Company's operations. Management compensates for
these limitations by also considering the Company's GAAP results. The
non-GAAP financial measures the Company uses are not prepared in accordance
with, and should not be considered an alternative to measurements required by
GAAP and should not be considered measures of the Company's liquidity.
Pursuant to relevant regulatory requirements, we are providing the following
reconciliations of the non-GAAP financial measures to the most directly
comparable GAAP measures. 

(1) Net revenue (non-GAAP)

AsiaInfo-Linkage's net revenue (non-GAAP) represents total revenue net of
third-party hardware costs that are passed through to our customers. We
believe total revenues net of third-party hardware costs more accurately
reflects our core business, which is the provision of software solutions and
services, and provides transparency to our investors. It is also the same
measure used by our management to evaluate the competitiveness and development
of our business.

Reconciliation of net revenue (non-GAAP) to GAAP total revenues

                   Three Months Ended Sep 30 Nine Months Ended Sep 30 2012 Q2
                   2012         2011         2012         2011
                   (in US dollar thousands)
Total revenues     132,221      119,285      382,189      349,952     126,271
Third-party        2,792        2,060        7,187        13,856      1,848
hardware costs
Net revenue        129,429      117,225      375,002      336,096     124,423
(non-GAAP)

(2) Gross margin of net revenue (non-GAAP)

Gross margin of net revenue (non-GAAP) is calculated by dividing gross profit,
excluding third-party hardware costs, amortization of acquired intangible
assets and share-based compensation expenses, by net revenue (non-GAAP). We
believe that this non-GAAP financial measure provides meaningful supplemental
information regarding our performance by excluding certain expenses and income
that may not be indicative of our operating performance. Management uses the
gross margin of net revenue (non-GAAP) measure to gain a better understanding
of the Company's comparative operating performance from period-to-period and
as a basis of planning and forecasting future periods. Management believes
this non-GAAP measure, when read in conjunction with the Company's GAAP gross
margin and other GAAP financial metrics, provides useful information to
investors by offering: a) the ability to make more meaningful period-to-period
comparisons of the Company's on-going operating results; b) the ability to
better identify trends in the Company's underlying business and perform
related trend analysis; c) a better understanding of how management plans and
measures the Company's underlying business; and d) an easier way to compare
the Company's most recent results of operations against investor and analyst
financial models.

Reconciliation of gross margin of net revenue (non-GAAP) to GAAP gross margin

                       Three Months Ended Sep   Nine Months Ended Sep
                       30                       30                    2012 Q2
                       2012         2011        2012       2011
Gross margin (GAAP)    37.3%        43.9%       38.3%      43.9%      38.5%
Third-party hardware   0.8%         0.8%        0.7%       1.8%       0.6%
costs^1
Amortization of
acquired intangible    3.9%         4.3%        4.0%       4.6%       4.0%
assets^2
Share-based
compensation           0.6%         0.4%        0.7%       0.4%       0.7%
expenses^2
Gross margin           42.6%        49.4%       43.7%      50.7%      43.8%
(non-GAAP)


(1) Percentages represent the difference between GAAP gross profit divided by
GAAP revenue and GAAP gross profit divided by net revenue (non-GAAP).

(2) Percentages represent the result of dividing the amounts of amortization
of acquired intangible assets or share-based compensation expenses by net
revenue (non-GAAP).



(3) Operating margin of net revenue (non-GAAP)

Operating margin of net revenue (non-GAAP) is calculated by dividing income
from operations, excluding amortization of acquired intangible assets,
share-based compensation expenses and non-recurring consulting related
expenses, by net revenue (non-GAAP). We believe that this non-GAAP financial
measure provides meaningful supplemental information regarding our performance
by excluding certain expenses and income that may not be indicative of our
operating performance. Management uses the operating margin of net revenue
(non-GAAP) measure to gain a better understanding of the Company's comparative
operating performance from period-to-period and as a basis of planning and
forecasting future periods. Management believes this non-GAAP measure, when
read in conjunction with the Company's GAAP operating margin and other GAAP
financial metrics, provides useful information to investors by offering: a)
the ability to make more meaningful period-to-period comparisons of the
Company's on-going operating results; b) the ability to better identify trends
in the Company's underlying business and perform related trend analysis; c) a
better understanding of how management plans and measures the Company's
underlying business; and d) an easier way to compare the Company's most recent
results of operations against investor and analyst financial models.

Reconciliation of operating margin (non-GAAP) to GAAP operating margin

                      Three Months Ended Sep   Nine Months Ended Sep
                      30                       30                     2012 Q2
                      2012         2011        2012        2011
Operating margin      1.7%         12.8%       1.7%        12.8%      1.6%
(GAAP)
Third-party hardware  0.0%         0.2%        0.0%        0.5%       0.0%
costs^1
Amortization of
acquired intangible   8.0%         8.9%        8.3%        10.8%      8.3%
assets^2
Share-based
compensation          1.9%         1.7%        2.0%        1.7%       2.0%
expenses^2
Non-recurring
consulting related    0.0%         0.0%        0.1%        0.0%       0.1%
expenses^2
Operating margin      11.6%        23.6%       12.1%       25.8%      12.0%
(non-GAAP)


(1) Percentages represent the difference between GAAP income from operations
divided by GAAP revenue and GAAP income from operations divided by net revenue
(non-GAAP).

(2) Percentages represent the result of dividing the amounts of amortization
of acquired intangible assets, share-based compensation or non-recurring
consulting related expenses, as applicable, by net revenue (non-GAAP).



(4) Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP)

Net income attributable to AsiaInfo-Linkage, Inc.  (non-GAAP) excludes
share-based compensation expenses, amortization of acquired intangible assets,
impairment loss on investments, non-recurring consulting related expenses,
dividend income and a 15% tax rate adjustment for LKNJ. We believe that this
non-GAAP financial measure provides meaningful supplemental information
regarding our performance by excluding certain expenses and income that may
not be indicative of our operating performance. Management uses the net income
attributable to AsiaInfo-Linkage, Inc. (non-GAAP) measure to gain a better
understanding of the Company's comparative operating performance from
period-to-period and as a basis of planning and forecasting future periods.
Management believes the Company's net income attributable to AsiaInfo-Linkage,
Inc. (non-GAAP) measure, when read in conjunction with the Company's GAAP net
income measure and other GAAP financial metrics, provides useful information
to investors by offering: a) the ability to make more meaningful
period-to-period comparisons of the Company's on-going operating results; b)
the ability to better identify trends in the Company's underlying business and
perform related trend analysis; c) a better understanding of how management
plans and measures the Company's underlying business; and d) an easier way to
compare the Company's most recent results of operations against investor and
analyst financial models.

Reconciliation of net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP)
to GAAP net income attributable to AsiaInfo-Linkage, Inc.

                         Three Months Ended Sep Nine Months Ended Sep
                         30                     30                    2012 Q2
                         2012        2011       2012      2011
                         (in US dollar thousands)
Net income (GAAP)        4,619       13,289     17,206    64,078      6,225
Adjustments:
- Share-based           2,415       1,937      7,294     5,728       2,454
compensation expenses
- Amortization of
acquired intangible      10,375      10,409     31,125    36,202      10,375
assets
- Impairment loss on    0           1,094      0         1,094       0
investments
- Non-recurring
consulting related       6           0          370       0           165
expenses
- Dividend income, net  (78)        0          (682)     (180)       (604)
of tax
- LKNJ tax rate 15%    0           0          0         (18,289)    0
adjustment
Net income (non-GAAP)    17,337      26,729     55,313    88,633      18,615

(5) Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic
share

Net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share
is calculated by dividing net income attributable to AsiaInfo-Linkage, Inc.
(non-GAAP) (which as discussed above excludes share-based compensation
expenses, amortization of acquired intangible assets, non-recurring consulting
related expenses, dividend income and a 15% tax rate adjustment for LKNJ) by
the same number of weighted average shares outstanding used in the computation
of net income per basic share. Management believes that net income
attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share, when used
in conjunction with the Company's GAAP net income attributable to
AsiaInfo-Linkage, Inc. per basic share, provides useful information to
investors for the same reasons discussed above regarding net income
attributable to AsiaInfo-Linkage, Inc (non-GAAP). In addition, net income
attributable to AsiaInfo-Linkage, Inc. (non-GAAP) per basic share allows
investors to evaluate the Company's operating performance from period to
period on a per share basis, thus providing a useful basis for assessing the
Company's value on a per share basis.

Reconciliation of net income attributable to AsiaInfo-Linkage, Inc. (non-GAAP)
per basic share to GAAP net income attributable to AsiaInfo-Linkage, Inc. per
basic share

                             Three Months Ended Nine Months Ended Sep
                             Sep 30             30                    2012 Q2
                             2012      2011     2012       2011
                             (in US dollars)
Net income per basic share   0.06      0.18     0.24       0.87       0.09
(GAAP)
Adjustments:
- Share-based compensation  0.03      0.03     0.10       0.08       0.04
expenses
- Amortization of acquired  0.15      0.14     0.43       0.50       0.14
intangible assets
- Impairment loss on        -         0.02     -          0.01       -
investment
- Non-recurring consulting  -         -        -          -          -
related expenses
- Dividend income, net of   -         -        (0.01)     -          (0.01)
tax
- LKNJ tax rate 15%        -         -        -          (0.25)     -
adjustment
Net income per basic share ( 0.24      0.37     0.76       1.21       0.26
Non-GAAP)

AR, IBM-Related AR, Revenue and DSO

AR balances included both billed and unbilled amounts. Revenue recognized in
excess of billings is recorded as unbilled receivable. In addition to revenues
from the sales of its goods and services and from hardware procured on behalf
of customers, the Company generated service revenues by acting as a sales
agent pursuant to the IBM-Type Arrangements. The Company's DSO calculations
are as follows as of the last day of the respective periods indicated, with
net AR excluding the receivables attributable to the IBM-Type Arrangements,
and with revenues excluding those attributable to the IT Security Business,
respectively:

1) Q1 2011 DSO = (Q4 2010 net AR + Q1 2011 net AR)/2/Q1 revenue x 90
2) Q2 2011 DSO = (Q4 2010 net AR + Q2 2011 net AR)/2/Q2 cumulative revenue x
180
3) Q3 2011 DSO = (Q4 2010 net AR + Q3 2011 net AR)/2/Q3 cumulative revenue x
270
4) Q4 2011 DSO = (Q4 2010 net AR + Q4 2011 net AR)/2/Q4 cumulative revenue x
360
5) Q1 2012 DSO = (Q4 2011 net AR + Q1 2012 net AR)/2/Q1 revenue x 90
6) Q2 2012 DSO = (Q4 2011 net AR + Q2 2012 net AR)/2/Q2 cumulative revenue x
180
7) Q3 2012 DSO = (Q4 2011 net AR + Q3 2012 net AR)/2/Q3 cumulative revenue x
270

The following table presents further information regarding the Company's gross
AR, net AR, revenues, and DSO.

                 2011-Q1 2011-Q2 2011-Q3 2011-Q4 2012-Q1 2012-Q2 2012-Q3
                 (inUSdollarthousands,exceptDSO)
Gross AR         302,806 298,146 292,220 281,564 301,333 307,261 282,424
- IBM Related AR 85,923  77,476  67,950  77,200  79,345  84,357  60,354
Net AR           216,883 220,670 224,270 204,364 221,988 222,904 222,070
Revenues         114,481 116,186 119,285 131,091 123,697 126,271 132,221
DSO (in days)    159     159     159     147     155     154     151

^

Cautionary Note Regarding Forward-Looking Statements

The information contained in this document is as of October 31, 2012.
AsiaInfo-Linkage assumes no obligation to update any forward-looking
statements contained in this document as a result of new information or future
events or developments.

This document contains forward-looking information about AsiaInfo-Linkage's
operating results and business prospects that involve substantial risks and
uncertainties. You can identify these statements by the fact that they use
words such as "anticipate," "estimate," "expect," "project," "intend," "plan,"
"believe," "will" and other words and terms of similar meaning in connection
with any discussion of future operating or financial performance. Among the
factors that could cause actual results to differ materially are the
following: government telecommunications infrastructure and budgetary policy
in China; our ability to maintain our concentrated customer base; the long and
variable billing cycles for our products and services that can cause our
revenues and operating results to vary significantly from period to period;
our ability to meet our working capital requirements; our ability to retain
our executive officers; our ability to attract and retain skilled personnel;
potential liabilities we are exposed to because we extend warranties to our
customers; risks associated with cost overruns and delays; our ability to
develop or acquire new products or enhancements to our software products that
are marketable on a timely and cost-effective basis; our ability to adequately
protect our proprietary rights; the competitive nature of the markets we
operate in; political and economic policies of the Chinese government; and the
outcome of the Special Committee's evaluation of strategic alternatives,
including the privatization proposal announced on January 20, 2012. A further
list and description of these risks, uncertainties, and other matters can be
found in our Annual Report on Form 10-K for the fiscal year ended December31,
2011, and in our reports on Forms 10-Q and 8-K filed with the United States
Securities and Exchange Commission and available at www.sec.gov.

For more information about AsiaInfo-Linkage, please visit
www.asiainfo-linkage.com.

For investor and media inquiries, please contact:

In China:

Mr. Jimmy Xia
AsiaInfo-Linkage, Inc.
Tel: +86-10-8216-6039
Email: ir@asiainfo-linkage.com

Mr. Justin Knapp
Ogilvy Financial, Beijing
Tel: +86-10-8520-6556
Email: asia@ogilvy.com

In the United States:

Ms. Jessica Barist Cohen
Ogilvy Financial, New York
Tel: +1-646-460-9989
Email: asia@ogilvy.com

SOURCE AsiaInfo-Linkage, Inc.

Website: http://www.asiainfo-linkage.com
 
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